Renting Out a Room in Your Home: Must You Report the Income to Social Security Disability (SSD)?
Free legal advice can be quite costly!
This cautionary tale demonstrates why people shouldn’t trust the free legal advice they get on the internet. On a website that allows people to post legal questions that lawyers answer for free, a person posted this question: I am receiving social security disability benefits. I am considering renting out a room of my house to a friend, to try to make ends meet. What is the effect/penalty, if I were to do this?
Obviously, this person, despite receiving SSD, is experiencing financial difficulties.
A little background on how the website works. Lawyers respond to questions so they can get new clients. The more questions lawyers answer, the higher ranking they get on the ‘leader board,’ which makes them look like experts. This system creates a perverse incentive for lawyers to post even when they do not know what they are talking about.
That’s what happened with this gentleman’s question. A business attorney replied saying, “If you receive money or services it will be income attributed to you.” The attorney is incorrect.
Generally, SSD recipients must report income, but income from renting living quarters is exempted from the reporting requirement unless the recipient is a real estate dealer.
After I posted correct information, the gentleman posted a review about me saying that I made a difference in his life. No doubt the money he will receive from renting out a room will help him greatly.
Moral of the story? If you have a question about SSD, contact a lawyer. SSD fees are capped by law, so you risk very little.